1. Field of the Invention
This present invention relates generally to health care insurance products and services. More particularly, though not exclusively, the present invention relates to a new method of selecting health care plans and a method of creating a virtual health care network.
2. Problems in the Art
Health care in America is changing rapidly. Twenty-five years ago, most people in the United States had indemnity insurance coverage. A person with indemnity insurance could go to any doctor, hospital, or other provider (which would bill for each service given), and the insurance and the patient would each pay part of the bill. But today, it is estimated that more than half of all Americans who have health insurance are enrolled in some kind of managed care plan, an organized way of both providing services and paying for them. Different types of managed care plans include preferred provider organizations (PPOs), health maintenance organizations (HMOs), and point-of-service (POS) plans.
Indemnity and managed care plans differ in their basic approach. Put broadly, the major differences concern choice of providers, out-of-pocket costs for covered services and how bills are paid. Usually, indemnity plans offer more choice of doctors (including specialists, such as cardiologists and surgeons), hospitals and other health care providers than managed care plans. Indemnity plans pay their share of costs of a service only after they receive a bill.
In contrast, managed care plans have agreements with certain doctors, hospitals, and health care providers to give a range of services to plan members/participants at reduced cost. PPOs have become a quite popular form of managed care. A PPO has arrangements with doctors, hospitals and other providers of care who have agreed to accept lower fees from the insurer for their services. As a result, cost sharing is generally lower than if a participant goes outside the network. In addition to the PPO doctors making referrals, plan participants can refer themselves to other doctors, including ones outside of the plan. If the plan participant goes to a doctor within the PPO network, the participant will pay a co-payment (i.e., a set amount for certain services). The coinsurance is based on lower charges for PPO participants. If the plan participant chooses to go outside the network, the participant will have to meet a deductible and pay coinsurance based on higher charges. In addition, the participant may have to pay the difference between what the provider charges and what the plan will pay.
Today, health care providers have formed their own managed care organizations and are competing successfully with the mainstream organizations. Provider owned organizations compete quite well in their local communities but cannot provide needed services to employer groups with employees in multiple states. For companies with employees in multi-state locations, the choice is national and regional PPOs. The problem with many national PPOs is that they are made up of many smaller PPOs which are accessed by the nationals via leased arrangements. This can be effective but presents problems when the providers of the leased networks do not know that their contracts have been leased and refuse legitimate discounts which causes havoc for payors, patients and ultimately employer groups. Thus, there is a need in the art for new and improved methods of selecting health care networks for employer groups with employees in multiple states.